Notification of Intention to Publish Revised NHS LIFT Model and Manual

Accounting for NHS LIFT under IFRS – revised guidance

Following the initial publication of ‘Accounting for NHS LIFT under IFRS – User manual and worked examples’ and ‘Accounting for NHS LIFT under IFRS – Universal model’ on 6 June and subsequently on 24 June two further errors have been identified within the model where the accounting treatment does not reflect the approach detailed in ‘Accounting for NHS LIFT under IFRS – Guidance’.

The two errors noted in the version issued on 23 June 2009 are as follows:

•In scenarios where the option to purchase the assets on expiry of the Lease Plus Agreement is assumed to be exercised, the amount paid to exercise the option and included in the minimum lease payments was incorrectly calculated. This amount should equal the anticipated fair value of the assets at the end of the contract that PCTs are required to obtain per paragraph 99 of the NHS LIFT IFRS Accounting Guidance Manual less the Adjustment applying where this value is substantially greater than the value assumed in the LIFTCo financial model. This error means that the profile of the finance lease creditor balance calculated in the Universal Model will be incorrect. This error will not affect the outcome of calculations where the option to purchase the assets is not assumed to be exercised.

•In all scenarios, the impact of starting and finishing the Lease Plus Agreement part way through a six month period was not reflected in the amount of lease interest charged in the starting and ending period. While not affecting the total lease interest charged, this error would mis state the interest charged in the first or last six month period, while also potentially affecting the amounts charged in all of the other periods.

These errors have now been corrected and a revised version of the model and manual published.

We have taken this opportunity to processminor corrections to examples contained within the guidance ‘Accounting for NHS LIFT under IFRS – Guidance’in sections 3.8, 3.9 and 4.2.

Details of all changes made to the guidance and manual since original publication on 6 June are detailed in the attached documents that are marked up against the originals. Details of all changes to the model since original publication on 6 June are detailed in the worksheet ‘Changes’ contained within the revised model and in the model modification release note.